This is a BLOG from Mark Cochrane of Business Strategies Group in Hong Kong. We've been keeping a close watch on B2B media and business information in Asia since 2000 and look forward to sharing insights with you.

David Shaw raises some good questions and some good ideas in his posting today regarding the challenges for large and small media companies as they take aim at China. Licensing seems like a quick and profitable entry option for many B2B companies but there are more than a few practical challenges including:

Finding copy that really fits an over-seas market's needs;

Making sure that it is translated well and accurately;

Getting paid;

Providing solid support to the licensee and thereby ensuring that they feel it is worthwhile continuing to pay you.

Add to this the challenges of copyright theft in many developing markets and particularly China and you suddenly have a very demanding environment in which to collect those license fees. For small companies the nuisance factor can outweigh the commercial benefits.

...the company planned to double its business in Asia in three to five years and that Asia would represent 20 to 25 pct of Reed Exhibition's global business in the same time period.

'If anyone looks at the number of halls being built in cities across China it's truly remarkable... and the exhibition industry will grow to fill those facilities,' he said.

He is quoted as inviting more deals of the Sinopharm type:

I hope that other state-owned enterprises see what we're achieving with Sinopharm and we hope to develop other such partnerships,' he said.

We shall watch this development with great interest.

Update: The Sunday Times in London, in a pre-announcement article, has valued the deal at $50 million although that basis of that valuation isn't clear. If it's even close, it is certainly the biggest trade fair deal in China yet.

The Financial Times doesn't speculate on the value of this deal although it does suggest that Reed's China revenues are now $100 million. We assume that is for the whole of Reed Elsevier.

Monday, August 29, 2005

Jewellery shows have been one of the most challenging areas for the international exhibition industry giants in China. Taxes, awkward Customs and other issues have meant that nobody has really got any convincing major events off the ground outside Hong Kong. Interesting, then, to see this piece in the People's Daily which shows just what an important market the PRC has become for jewellery: there's nothing like those portable assets you can buy for cash as a way of concealing ill-gotten gains.

China becomes leading jewelry consumer: "The Platinum Guild International unveiled data recently which ranked China as the second largest consumer of gem products, with its over 100 billion yuan of annual sales for both jewelry and jade, second only to the US

Update: The press release issued today reveals that Reed has acquired 50% of CPEC from Sinopharm to form the new venture. CPEC will bring 11 exhibitions into the joint venture. Its reported revenues in 2004 were $20 million.

Monday, August 22, 2005

Arriving in Tokyo for a week's business, I find myself pointed back to Hong Kong with this link to Christine Loh's new blog "Civic Express". Christine, a former Hong Kong Legislator turned lobbyist, runs one of the SAR's few credible think tanks, Civic Exchange, and regularly turns in commentary on issues of import to people here which are better reasoned and more open-minded than most.

It's no surprise to see her adopting the 'blogosphere' to promote her views. She has always been a step ahead of most of the politically active in Hong Kong. I wonder how many people in Beijing or the Hong Kong Government will read it though?

Saturday, August 20, 2005

We were interested to read an Economic Times piece from India which identifies Cybermedia CEO Pradeep Gupta as one of the backers of a major new Indian film, Mangal Pandey —The Rising. Depending on who's history books you read, this covers what the British call the Indian Mutiny and some Indians regard as the first great battle of the Indian independence movement.

Gupta is joined in this venture by a number of senior figures in India's IT industries and the Times article notes:

When it comes to a purely businesslike approach...Kaleidoscope Entertainment is much closer to a tightly-run successful IT company than to a rag-tag Bollywood production house. The carefully-alibrated strategy and execution of the business plan behind Mangal Pandey is clearly helping script the future of Bollywood, Inc.

An interesting piece this week on the AsiaPundit blog about how China is hurting itself with Internet censorship. This points to the direct business issues involved rather than the somewhat less tangible - although no less important - civil liberties issued tied up with censorship. If you can't get the information you need to do business, you will not become a major business centre, particularly for the high value-added financial services and related activities to which so many cities aspire these days.

In that context, I would question the Myrick, the blogger's claim that he lives in China's "international financial capital". Shanghai can continue to build airports, roads, World Expos, tall, shiny buildings and trendy restaurants as though there were no tomorrow but that alone won't make it the financial capital of Asia. For the foreseeable, as Myrick points out, that role is securely bedded in Hong Kong. Shanghai will continue its evolution as the main centre for domestic China business. Competing with one hand firmly tied behind its back, it may reach, though, a development ceiling in the fairly near future.

Friday, August 19, 2005

After a quiet spell, Rebecca MacKinnon's BLOG has sprung back to life with more news of blog-blocking in China. We were in Beijing at the beginning of last week and were frustrated to have forgotten until we got there that many of the BLOGs we regularly review were inaccessible. Couldn't post here either, of course.

Stephen Baker at Business Week's Blogspotting picked up earlier this week on other drawbacks of free blogs. Much of that, though, strikes us as techno-snobbery and blog-hypery and is far less insidious and dangerous than what is happening in China.

Wednesday, August 17, 2005

Given the extraordinarily small size in dollar terms of the Indian business magazines market (revenues no more than $12 - 15 million at our last count for the general business titles), the threat from effective electronic media must be greater there than almost anywhere. ContentSutra reports as follows:

No coincidence that New Zealand's greatest exhibitionist, AJ Hackett has also just launched his "Sky Jump" attraction at the Macau Toweras the blogmacau.info BLOG reports. The place is hopping and, as the report says:

Monday, August 15, 2005

The China Digital Times reports on plans for a September meeting in Wuhan of the World Overseas Chinese Media Forum. Efforts continue among many companies such as Singtao News Corp. to link together a network of Chinese language media around the world. The idea is that, as China's power continues to grow, such a group would have the potential to become a News Corp. or Dow Jones of the late 21st (or even 22nd) Century.

Continued restrictions on foreign ownership of media in the biggest Chinese language market of them all - China - makes the potential for realising this dream still some way off. But, you can be sure that they will keep trying to put the pieces together.

Friday, August 12, 2005

There's not a whole lot more to say about the Alibaba.com/Yahoo deal which hasn't been said already. It's a rare B2B deal in Asia that makes it into the specialist press yet alone the front page of all major news media.

We have plugged the numbers into our tracking of M&A and investments in business and specialist media in the region and, of course, it blows everything else off the charts (click on the chart below to see it more clearly):

For the record, the new deal takes the total value of deals in the region since we've been watching (1997) up to $1,418.8mn. The average size deal is now $35.5 million. Of the 40 deals tracked, 10 have been in the data/online sector, now the largest we track, although the other 9 deals totaled only around $50 million between them. The bar has been very dramatically raised!

Thursday, August 11, 2005

As widely predicted yesterday, it is now confirmed that Yahoo will take a 40% stake in Alibaba.com for $1 billion cash and an injection of the Yahoo China business into Alibaba. The FT notes in its report that Alibaba.com founder, Jack Ma, will take over management responsibility for the Yahoo business in China.

Alibaba's story has been one of patient building through the craziness of dotcom bubble round 1, of Jack Ma keeping his head despite adulation from from a range of dubious cheerleaders including the Chinese government and Forbes, and of unusually patient investors.

Which way Jack will take the new combined company will be very interesting to see although it looks to us as though this may well mark the point at which it began to come clear that eBay is looking at its second failure in Asia....and a failure in China will be frowned upon by the markets.

Update: You have to love the Xinhua take on this deal: Alibaba.com acquires Yahoo China. The $1 billion Yahoo is sinking into Alibaba is relegated to paragraph 3!

Global Sources has just announced its Q2 results and notes in its press release that: "the recent reevaluation of the Chinese yuan..., at the adjusted exchange rate of 8.11 yuan per U.S. dollar..., will positively impact the company's earnings in 2005 by less than one percent".

As many of us had predicted all along, the changing value of the Renminbi isn't going to make very much difference at all to those engaged in international trade with China. There are lots of reasons for this. Let me know if you want to know.

It's obviously alliance time for the big B2B online players. As we sit waiting for the Yahoolibaba press conference in Beijing, we note that Global Sources is making play of its tie-up with eBay. In their press release, Global Sources CEO Merle Hinrichs notes "Later this year, Global Sources Direct will be offering warehousing, customer service, and payment services to assist suppliers with selling on eBay China, the Reseller Marketplace, and other eBay properties."

The event already runs in Amsterdam, Cannes and Moscow and definitely appeals to the world of conspicuous consumption which we are all led to believe characterises the China of today. The organisers might like to know that they have included a picture of Hong Kong, not Shanghai, in their "Facts & Dates" section....perhaps an indicator of where they should be looking. Shanghai remains flavour of the month, particularly in Europe, but Asia's top luxury market by far is Hong Kong. No sales taxes help those millionaires keep their millions as they splash out on the brand names...

Wednesday, August 10, 2005

John Battelle's blog on the search industry points to a series of gossipy posts suggesting that Yahoo is about to purchase 35% of Alibaba.com. In the newspaper world, August has always been called the "silly season" when the best wild rumours find a place on the news pages. I wonder if this falls into that category?

Alibaba has been keeping its IPO powder dry until it felt the market was really right. It doesn't need the money having raised a good deal in private placements last year for investing in its Taobao auction site which is giving eBay a serious run for its money in China. We shall see.

Update: Well, the China Daily isn't usually known as a gossip rag....not a great newspaper, but not a gossip rag....and it has reported sources at Softbank, a major investor in Alibaba.com, saying that a deal is almost done.

...and more: A Reuters story, still based on rumour but...you've got to love this...carried as a leading item by Yahoo, now puts the deal at $1 billion plus Yahoo China injected into Alibaba.com. Sounds like a great deal for Jack Ma, Joe Tsai and the team if its true. It's supposed to signed tomorrow.

Forbes reports on an interesting deal between Google and China Enterprise which will have CE re-selling AdWords in the PRC. Not something to set the world on fire, perhaps, or to have Wall St. investment bankers immediately salivating (although watch them eye up China Enterprise for a ridiculous valuation). It is, though, the kind of step-by-step business building which will really characterise the growth of the Internet in China in the long run.

P.S. If we can find a link to China Enterprise that works, we'll add it here. Seems odd that it isn't working now...

Monday, August 08, 2005

Many media industry web sites have picked up on some aspect of PWC's annual 'state-of-the-industry' review of the media. We were interested to see that, in its most recent e-newsletter, the international magazine publishers' association, FIPP, decided to pick out the prediction that China's media will overtake Japan's by 2008.

Friday, August 05, 2005

In a real blast of the late 1990s, John Battelle points us to a Reuters story about Baidu's planned US IPO. Talk of "Internet valuations", pe multiples of 67 times and the "China factor" has us reaching for bubble and b*****t alarms:

It's a Hot Search IPO!: "Baidu, that is. Minority owned by Google, rumored to be courted by same, under the cloud of alleged copyright abuse, but still raising its range and setting hearts aflutter. More from Reuters...."

Thursday, August 04, 2005

A flattering trackback to the Expophile led me to this interesting site with a very wide-ranging overview of exhibition industry goings on. Worth a look...

The Future is Mao: "Paul Woodward's excellent Asia Business Media points to the recently-announced Mobile Leisure 2006, to be held next April in Hong Kong. A lot of westerners look at the stirring Chinese as interested in more foundational business forums; stuff to underpin the giant economy that many fear will not-so-eventually dominate ours (America's). ML 2006 is anything [...]"

Rich Westerfeld's TSMI's Trade Show Marketing Report blog pointed us to Hotel Chatter. For those who travel a lot for their work - many of us in my business - this story gives me goosebumps. Sounds like the worst nightmare of a hotel. Orange, small and tacky....

London's Easy Hotel Opens: "Speaking of cheap hotel alternatives, little brother fills us in on the cheapest of the cheap--easyHotel London. For ~$35 you can get a sleeping box located just steps from the tube in London. However, make sure you set your expectations correctly before booking, this place is a step below no frills: *9x10 room *Bed *Bathroom *Flat screen TV You can opt for a window, a tv remote, and daily cleaning--for an additional charge. Oh, and there is no elevator, but the building is only four stories. As always, if you get there before us, let us know about it.

Wednesday, August 03, 2005

We were interested to see a report from the site on the top 20 products groups in which users are interested. There is clearly a 'Korean twist' to this list which would be quite different from similar lists generated by the more China-focused sites like Alibaba.com and Global Sources:

Tuesday, August 02, 2005

Lack of good, consistent industry data is one of my pet peeves regarding the trade fair business. It is going to be hard for exhibition organisers to be taken as seriously as other parts of the business media as long as they continue to hide behind 'fuzzy' (there, I'm being polite) figures and industry associations are forced to take wild guesses about who is doing what.

This is a problem far from restricted to Asia and I was interest to see the following post on the TSMI Trade Show Marketing Report from the US:

Where's Our Red Book?: "I get a number of emails asking for sources on industry data. Usually these are fairly straightforward requests for data which can be had (often for a price) from the usual suspects. Today I got a more interesting request. The..."

We recently produced a report on Asia's trade fair industry together with UFI, the global association of the exhibition industry, and the fact that it is selling so well is a clear indication of just how much people need this stuff.

Monday, August 01, 2005

Our monthly ranking of B2B web sites in Asia saw some impressive movement among two of the key IT industry sites in China. Both chinabyte.com and zdnet.com.cn saw their position in the Alexa.com rankings increase by over 300 places.

The July Top 10 rankings look as follows (with June position in brackets).

Back in the saddle and I discover that Hugo Martin is, as ever, on the ball with picking up the latest international Internet statistics. His brief post on the Internet World Stats caught my eye as we now have more users in Asia than in any other part of the world.....and growth potential remains massive; penetration is only 8.9%, compared to 68% in the US.